Business / Economy

Redevelopment and hotel demand lift commercial land prices outside Japan's major metropolitan areas for first time in 26 years

Kyodo

Commercial land prices outside major metropolitan areas rose in 2017 for the first time in 26 years, registering a 0.5 percent year-on-year increase, thanks largely to redevelopment projects and hotel construction, government data showed Tuesday.

As of Jan. 1 of this year, regional land prices, which also includes residential land values, rose a marginal 0.04 percent from a year before, according to the annual survey by the Ministry of Land, Infrastructure, Transport and Tourism that covers 26,000 locations nationwide.

But 52 percent of regional locations sampled for the survey logged price declines, indicating a widening gap between urban and rural areas, the ministry said.

Redevelopment and construction of hotels targeted at growing numbers of foreign visitors have helped boost regional commercial land prices, mostly in the four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka, which saw an average year-on-year price increase of 7.9 percent.

Regional residential land prices fell 0.1 percent, compared to a 0.4 percent drop a year earlier, as improved employment and recovering demand for land in convenient locations — on the back of low interest rates — helped slow the pace of decline, the report showed.

Overall, average commercial land prices nationwide went up 1.9 percent, rising for the third straight year, while residential land prices increased 0.3 percent after edging up 0.02 percent the previous year.

Land prices rose in 41 percent of the 26,000 locations surveyed, eclipsing for the first time in a decade those that saw drops, with prices falling in 38 percent of the locations.

By prefecture, Kyoto recorded the highest growth in average commercial land prices, at 6.5 percent. For residential land prices, Okinawa showed the strongest increase with 5.5 percent.

The highest land price across the country was ¥50.50 million ($475,000) per square meter at the head office of Yamano Music Co. in Tokyo’s Ginza shopping district.

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